• by Laurie Sullivan  @lauriesullivan, July 29, 2009

Advertising executives in the search market give the Microsoft-Yahoo deal mixed reviews. While some give a thumbs-up to the news, others doubt it will provide the two with enough search power to constitute a formidable threat to the No. 1 engine, Google.

As search industry executives digest the news of the 10-year license deal that gives Microsoft access to the Internet's second-largest search engine audience, not all believe that Yahoo made a positive move.

Kathy Sharpe, CEO of Sharpe Partners, a digital marketing agency in New York City, believes the deal will not be executed as designed, and will never come to market as described. "This is another two years Yahoo wasted figuring out how to go to market again and Microsoft tinkers with MSN," she says. "These two don't even have a social networking strategy. While we are all moving on to whatever is next, they are going to be re-tooling a search engine and trying to align sales forces that will inevitably be at war."

Others say the deal, which ad executives expect to be closely reviewed by regulators, should go smoothly. But advertising and marketing companies that have only relied on Google for search advertising will experience real challenges. Rob Garner, strategy director at iCrossing, says those companies that ignored Yahoo and Microsoft's search technology because Google owned the lion's share of the search ad market need to get educated quickly with how the other engines work.

Ad executives who say the Yahoo-and-Microsoft combination will give them a stronger alternative to Google also make the argument that it will become easier to fulfill paid search needs. Agencies tend to rely on Google's paid search model because it's easy to use.

"From a tactical standpoint, it brings together Yahoo's efficient sales staff and MSN's improved interface for paid search," says Suzy Sandberg, president at PM Digital. "The numbers continue to show that Bing is making a big impact on the market and consumers are drawn to it. Partnerships like this one mean exciting changes in SEM strategy are ahead."

Andrew Lovasz, vice president of search marketing for Moxie Interactive, says bringing Yahoo, the No. 2 search engine, and Microsoft, the No. 3 search engine, under the MSN adCenter platform monetizes search more efficiently. It benefits advertisers because it creates one set of standards for paid search advertising.

Yahoo has always used a different method of campaign management and organization compared to Google. Lovasz says Microsoft more closely emulated Google's campaign structure when designing adCenter.

But with the deal taking up to 36 months to pass regulatory approval and implement, Connectual Managing Partner Aaron Goldman wants to know if Yahoo will continue to invest in keeping its "search engine up to snuff." In a blog post, he points to Yahoo CEO Carol Bartz's comment that with Microsoft powering Yahoo Search, the company will have an opportunity to focus on the things it does best, such as mail, finance, news, sports, entertainment and mobile.

"With Yahoo's search product being left to rot, can it really be expected to maintain its 20% market share?" Goldman writes. "Hardly. And where are those users going to migrate?"